P.R. gov’t to appeal ‘Wal-Mart tax’ invalidation

Wal-Mart prevailed against the government over the so-called validity of the transfer-pricing tax.

The Commonwealth will appeal the decision by U.S. District Judge José A. Fusté invalidating the transfer pricing tax applied to Wal-Mart, Gov. Alejandro García-Padilla said Monday, while blasting the judge for “taking away $100 million” from the people of Puerto Rico.

“Through his decision, this judge took away $100 million from the Puerto Rican people to give to Wal-Mart. He just took away $100 million from children who ride in public school transportation, from those who receive special education, from public schools, and from municipalities to lay down asphalt,” the governor said in a press conference at La Fortaleza.

“Now we’ll have to find that money somewhere else,” he said.

Saying the court lacks jurisdiction over the case, García-Padilla blasted the judge for disallowing the government from accessing Wal-Mart’s financials to see if their claims that the special tax was too burdensome.

Last year, the government enacted Law 72 that increased the tax for companies generating more than $2.75 billion in revenues that buy goods from off-island “related parties” to 6.5 percent from 2 percent. Upon determining it is the only company to fall into that category, Wal-Mart sued the government, saying the tax was unconstitutional because it violated interstate commerce.

“Today’s ruling is a victory not only for Wal-Mart Puerto Rico but also for our customers, our more than 14,000 Puerto Rican associates, and the many Puerto Rican suppliers and farmers who depend so heavily on us,” said Lorenzo López, Wal-Mart spokesman.

Law 72 “was very harmful to our business, confiscating more than 100 percent of our profits. Because we want to remain in business in Puerto Rico and to be part of the solution to the current fiscal crisis, we are grateful that the court acted so promptly in hearing this case and striking down the tax,” he said.

The Treasury Department is coordinating with the Justice Department to appeal “as soon as possible,” Treasury Spokewoman Maru Quintero said.

“We will analyze in detail all the legal arguments in the judgment and will raise all the procedural shortcomings we believe the judgment had,” she said.